Shane Ltd is a pharmaceutical entity trading in Durban. The company commenced operations at the beginning of the 2012 year. Although being profitable, the business is experiencing cash flow problems. The financial director has approached you for advice in order to remedy this situation.

The following amounts were extracted from the records of the company:

Required:

2014 2013 R 220 000 150 000 25 000 Sales (all on credit) Cost of Sales (all on credit) Debtors Creditors Inventory Bank overdraft R 250 000 165 000 29 600 17 000 30 4001 (2 000) 14 700 26 000 (1 000) 4.1 Briefly discuss the purpose of financial statement analysis. Calculate and briefly comment on each of the following ratios for 2013: 4.2 4.2.2 Stock turnover rate 4.2.3 Current ratio 4.2.4 Acid test ratio NB: Do not use average ratios